There’s business to be had in the small(er) market, and 401(k) advisors now have more options to help a sector that employs the majority of American workers.
While scale was traditionally an issue, technology and innovation are helping to get more people covered at more companies.
Digital retirement plan platform provider Vestwell recently surveyed 91 plan sponsors and 604 employees to gain a better understanding of how employers can help employees get the most of their retirement plan.
For many sponsors, their most significant pain point is employee engagement.
However, Vestwell found that a majority of employees don’t even have a basic understanding of their retirement plans.
And while sponsors in the small plan market don’t have a ton of time to manage their company 401ks, they’re committed to providing a valuable employee experience.
Fortunately, by better understanding employees’ views on retirement planning, they can more effectively (and efficiently!) support retirement readiness.
Vestwell learned:
Understanding
Fully 76% of employees said they understand their plan at least somewhat well, while only 46% of sponsors believe the majority of their employees understand how a retirement plan works.
Turns out, a majority of employees not contributing to a retirement plan don’t understand key terms such as rollover, HSA, and target-date fund.
Saving
What participants do know is that they need to be saving more. Of those who are putting money away, only 36% are saving over 6%, while 64% think they should be
The greatest financial stressor for contributors is retirement (35%) and for non-contributors, it is paying off debt (40%).
Education
Employees want to know more and save more when it comes to retirement.
86% of employers feel obligated to help educate employees on saving for retirement; similarly, 87% of employees believe sponsors should be involved.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
